MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) and PharmaCann, LLC made a big deal back in December of 2018 that MedMen would buy PharmaCann in an all-stock transaction. That deal, once valued at $684 million, is now off. MedMen is now saying that it will focus on leveraging its retail brand, its leadership position in California and its digital platform to grow the business will create greater shareholder value than the completion of the transaction.
The company said in a statement, “In connection with the termination, PharmaCann has agreed to transfer certain cannabis licenses and related assets in Illinois and Virginia to MedMen for no additional consideration from MedMen, other than the forgiveness of certain debt.” Basically, to cover the termination fee PharmaCann is giving up four assets:
- Operational cultivation and production facility in Hillcrest, Illinois
- Retail location in Evanston, Illinois
- Retail license for Greater Chicago, Illinois
- License for vertically integrated facility in Virginia
“The cannabis sector has evolved tremendously since we first announced the PharmaCann transaction and based on the current macro-environment and future opportunities that exist for our business, we believe it is now in the best interest of our shareholders to deepen, rather than widen, our Company’s reach,” said Adam Bierman, MedMen co-founder and chief executive officer. “Looking at the PharmaCann portfolio today, Illinois has emerged as the most attractive opportunity for our longer-term, strategic growth plan. The addition of those assets, without dilution, is a win for MedMen and our shareholders.”
Four Weeks Ago It Was A ‘Transformative’ Deal
Just a few weeks ago Bierman was crowing about the PharmaCann acquisition and suggesting it was still moving forward. On September 10, he said, “Our transformative acquisition of PharmaCann will mold us into an even bigger and bolder company for our consumers. This acquisition doubles the number of states where MedMen has licenses, extending our geographic footprint and creating tremendous opportunity for our company and our shareholders. We are excited to be one step closer to closing the acquisition.”
On March 15, 2019, pursuant to the HSR Act, MedMen and PharmaCann each received a request for additional information from the U.S. Department of Justice Antitrust Division. On August 9, 2019, both MedMen and PharmaCann declared substantial compliance with this Second Request. On September 9, 2019, the waiting period under the HSR Act, which extended automatically for 30 days following both companies declaring substantial compliance with the Second Request, expired. That was when MedMen declared it had green light to complete the deal.
New CFO For MedMen
The company also took this moment to announce that Zeeshan Hyder has been appointed Chief Financial Officer at MedMen. Mr. Hyder, currently MedMen’s Chief Corporate Development Officer, has been an integral part of the leadership team at MedMen since 2017, overseeing corporate development, investor relations and other financial growth initiatives. To date, Mr. Hyder has led over $300M in M&A deals executed, partnered with the CEO to take the company public and raised $500M in capital for direct investment into the business.
Hyder succeeds Michael Kramer, who apparently was terminated as of October 7, 2019. Kramer was only just hired in December of 2018 and he followed the previous CFO James Parker who only lasted a year and half and is currently suing Medmen for breach of contract.
MedMen stock was lately trading at $1.72, down from its 52-week high of $7.57.